TOPICS > Economy

What More Could, Should Government Do for U.S. Economy?

June 7, 2011 at 12:00 AM EST
A new Washington Post/ABC News poll finds that 57 percent of those surveyed say an economic turnaround has not yet begun in the U.S. Gwen Ifill discusses what's next for the economy -- and the political implications -- with USA Today's Susan Page, Wells Fargo economist Mark Vitner and Tom Binnings of Summit Economics.
LISTEN SEE PODCASTS

TRANSCRIPT

GWEN IFILL: Tough numbers on the economy and equally tough poll numbers for the president, they formed the backdrop as he hosted the leader of Europe’s major economic power.

When President Obama appeared at the White House today with German Chancellor Angela Merkel, the subject quickly turned to the stumbling domestic economy.

PRESIDENT BARACK OBAMA: I’m not concerned about a double-dip recession. I am concerned about the fact that the recovery that we’re on is not producing jobs as quickly as I want it to — to happen.

GWEN IFILL: That sluggish pace was documented last week in a gloomy jobs report, showing employers added a lower-than-expected 54,000 positions last month. And, today, there was fresh evidence of the slowdown.

According to the Department of Labor, businesses advertised 100,000 fewer jobs in April than they did in March. Emphasizing recovery over recession, the president chose to focus on other more favorable numbers.

BARACK OBAMA: Over two million jobs created over the past 15 months, a rebounding of the manufacturing sector in the United States that’s exemplified by the recovery of the big three automakers here all indicates that we have set a path that will lead us to long-term economic growth. But we have still got some enormous work to do.

GWEN IFILL: But among the American people, pessimism appears to be winning out. A Washington Post/ABC News survey published today found that, while 42 percent of those polled say the recovery has begun, 57 percent see no sign of a turnaround.

The president acknowledged the frustration, but said the key is not to panic, not to overreact.

BARACK OBAMA: We’re going to have some days where things aren’t going as well as we’d like. There are going to be some times where we’re surprised with better economic data than expected. We are on the path of a recovery, but it’s got to accelerate.

GWEN IFILL: Republicans on Capitol Hill and on the presidential campaign trail say the president has only his own policies to blame. In Chicago, GOP candidate Tim Pawlenty said Mr. Obama is satisfied with a second-rate American economy.

TIM PAWLENTY, (R) presidential candidate: President Obama has had three years to turn things around. And all we have to show for it now is $3.7 trillion more in debt and climbing, nearly two million fewer jobs, a Congress that hasn’t passed a budget in more two years, a health care takeover that he pretends we can afford and a fiscal crisis he pretends we can ignore.

We have tried it President Obama’s way, and it’s only made the economy worse.

GWEN IFILL: That argument might be taking hold. The new poll shows, for the first time, Mr. Obama is in a statistical dead heat with at least one potential Republican challenger, Mitt Romney.

Federal Reserve Chairman Ben Bernanke conceded today the economy remains weak, but said temporary factors like high gas prices and fallout from the crisis in Japan are the cause. He predicted growth will pick up later this year.

But do Americans believe that?

We explore that now with Susan Page, Washington bureau chief for USA Today, Mark Vitner, senior economist for Wells Fargo in Charlotte, N.C., and Tom Binnings, senior partner at Summit Economics in Colorado.

I have to ask you, Susan, when you — when you listen to the numbers and you listen to the economists, it seems like there’s sort of a clash. Americans seem to be a lot more downbeat than economists are.

SUSAN PAGE, USA Today: You know, economists tell us that the recovery started two years ago. But you couldn’t see that in the lives of most Americans.

And most Americans look and they see problems with their job or their neighbor’s job or their kid getting a job when he gets — he or she gets out of college. They see housing — the housing market continuing to slump. They look at gas prices this summer straining their budgets. Americans do not believe we’re in a recovery. And the recovery is fragile enough that it’s very hard to convince them otherwise.

GWEN IFILL: Mark Vitner, we hear about gas prices. We hear about housing costs. We hear about the unemployment rate. What have you seen that is driving this pessimism?

MARK VITNER, Wells Fargo: Well, I think that, in many respects, when economists talk about recovery, it’s really a recovery that only statisticians could love, because, statistically, the economy is doing better, but it’s not doing better enough that most people can see it in their everyday lives.

But what they do see in their everyday lives is higher gasoline prices and higher food costs. That’s something that they see on a regular basis. And that is a material difference in their livelihood. And that’s one of the things that is nagging at people.

And the other is that the unemployment rate has been very high for a very long time. And even if you have held a job throughout the crisis and the recession and the recovery, you probably know somebody who lost their job and who is struggling and who has been out of work for quite some time.

I ask customers when we go out and meet, I ask how many people know of someone who has been out of work for a year or more, and a majority of hands still go up.

GWEN IFILL: Tom Binnings, when we talk about this, often, we talk about the national unemployment numbers or the national housing numbers. How much of this is regional? How much of this, I guess, depression, the personal depression and pessimism, is regional, and how much of it is something that is just coast to coast?

TOM BINNINGS, Summit Economics: Well, I think, for the most part, it’s coast to coast. Certainly, different regions are better off than others. Those that were heavily dependent upon the housing boom in their economies are feeling the brunt of it, you know, in terms of unemployment. Their unemployment rates are higher.

Then you have sectors like the ag sector, agriculture, as well as the energy sectors, that are doing well. So regions that are more based upon those sectors are faring better.

Here in Colorado, we’re — we’re kind of a little bit of both. We’re — we have both of those going on for us. We’re kind of at the national average.

GWEN IFILL: And let me ask you to expand on that. Does it go — this lack of consumer confidence, does it go beyond these — I guess these three pillars about joblessness and housing and the general economy? Is there something else underlying this?

TOM BINNINGS: Well, I think so.

You know, I think that the rate of recovery is to painfully slow, that nobody has experienced that before. Baby boomers have spent their whole careers — and we have had recessions, but we have bounced back pretty quickly.

In addition to that, I think there’s a lot of concern out there — and I think people are really in tune to it — that the ability of the federal government to deficit-spend at such high rates has been one of the things that sort of kept the — kept us from going even further down or has created a bottom for the economy.

And I think there are real concerns about what is going to happen as we begin to move towards fiscal austerity with the federal government.

GWEN IFILL: Mark Vitner, that raises an interesting question. Is this a matter — are people paying attention to this deficit discussion that we’re having in Washington? Is that also driving the mood?

MARK VITNER: Well, I think they’re paying attention to it. I don’t think it’s their overriding concern.

We have got two — two concerns on that level. There are folks that are — they’re very concerned about the persistence of large federal budget deficits, and they’re worried that taxes are going to have to rise substantially into the future. And that makes them reluctant to take risks in their personal lives, to buy a house, to buy a car, to expand their business.

And then there are those that are worried about the austerity, the cutbacks that government is going to have to make. We’re already seeing some impacts of that on the state and local level. We estimate that state and local governments will eliminate 20,000 to 30,000 jobs every month between now and the middle of next year. And that’s a real drag on the economy.

And these are folks that really thought that they were immune from the business cycle, because, in past cycles, you didn’t see a whole lot of actual, outright job losses at state and local government.

GWEN IFILL: Susan, let’s talk about the — kind of the political fallout here. We have seen the president say the last couple of days, let’s just be patient. We’re getting — it’s painful, it’s slow, but let’s just be patient.

We also saw Ben Bernanke say a version of that today. Does that translate politically, or is this an opportunity now for Republican critics and people who would like his job to say, no, we need to move faster, and he’s just — he’s just not getting it?

SUSAN PAGE: I remember, in 1982, when Ronald Reagan was in some economic trouble and he encouraged Americans to stay the course, which didn’t work in that midterm election. They lost 26 House seats, the Republicans did.

And I think the idea of patience will not sustain Americans who have had year after year of economic troubles. You know, we have had this recession and the feeling of a recession for some time. The fact is, for the past decade, Americans have not seen an increase in their personal income levels.

This has been hard for Americans, who are used to the American dream and the feeling that things are going to be better for them if they work hard, and that their kids, if they go to school and work hard, will have better lives than they do.

In the USA Today/Gallup poll, we find for the first time in the history of our polling that a majority of Americans do not believe that tenet of the American dream, that their children will have a better life than they have. That is something that goes to economic fundamentals and political fundamentals, too. That’s what this election may be about next year.

GWEN IFILL: You remember 1992, when — the last time an incumbent was unseated. It was also because of this idea, supermarket scanners, you name it, that he didn’t seem to get it. Is that what polling is telling you also about how people view the president’s handling of this economy?

SUSAN PAGE: You know, we find the president has some real strengths. The Osama bin Laden operation really boosted his standing in handling terrorism.

But when we ask Americans, do you — what — do you approve of the way that President Obama has been handling the economy, only 37 percent of Americans say they do. That is a big problem for President Obama. That’s a number that has got to be higher if he’s going to get reelected next year.

GWEN IFILL: Tom Binnings, how do you speed this up? What is it that government should or can be doing, that private sector should or can be doing to get this painfully slow economy kick-started?

TOM BINNINGS: Well, that’s a really tough question.

And the government is fairly hamstrung with the amount of — with the deficit and being able to at least sell that politically to continue on with deficit spending. I think there are a few things that can happen. And part of it, probably from a political point of view, has to be more the rhetoric side than — as opposed to what can the president really do between now and Election Day, in less than two years, so — or about two years from now.

So, we — some of the things are — are an energy policy, becoming very aggressive, I think, in selling to the American people the need to develop both traditional energy sources from in the United States, as well as continue the course with our renewable energy investments, which have done — both of those sectors are doing very well out here in the West and in Colorado in particular. So that’s one thing that can happen.

Really focusing on giving the business community and small business people more confidence in the economy, and talking a lot about deregulation and the need to get back to a point where people see an opportunity to invest and to earn a living from a business point of view.

GWEN IFILL: Mark Vitner, around the country, do you hear people saying, this is — these are my expectations of government, or do they have expectations anymore?

MARK VITNER: They don’t really have that many expectations of government. There’s a lot of frustrations that are being voiced.

It seems that — that regulation has increased, and that it’s increased at a number of levels. There’s often conflicting regulations. And companies are — are really kind of put off by the amount of regulations that are hitting them all at once. And they have — they’re hearing different things from different regulators. And that is a big — that is a big problem.

And if you want to do something that doesn’t bust the budget, address the regulatory burden of small- and medium-sized businesses. That would — that would help promote economic growth, and it wouldn’t cost anything.

GWEN IFILL: Susan, we — we know that in — sometimes in politics or in leadership, this is about the message. And sometimes it’s about the fact of the matter, and that no message can overcome what the facts say.

Do you have any sense about whether this administration knows which it is?

SUSAN PAGE: Well, you know, I think that the Obama administration has had kind of a — too many messages sometimes on the economy, and not enough focus on the issue that Americans care most about. And that’s the economy and especially the issue of jobs.

But the fact is, you could have the best message in the world, and if people were looking around and still seeing their neighbors unemployed, still worry about losing their own jobs, still underwater on their house, maybe not able to move to a better job in a different location because they can’t sell their house, nothing is going to convince them that times are good.

You really need the reality of the economy to get better. And you need to get a head of steam — if you’re sitting in the White House — a head of steam going within the next year or so to convince people by the times they go back to the polls, that the economy is doing better and that they can trust that is going to continue.

GWEN IFILL: Susan Page from USA Today, Tom Binnings of Summit Economics, and Mark Vitner of Wells Fargo, thank you all very much.

TOM BINNINGS: Thank you.